FIX Trading Conference back in LatAm

Christian Zimmer1Dr Christian J. Zimmer, Co-Chair Latin America Subcommittee, FIX Trading Community, Vice President, Itau Asset Management.

After the 2012 FIX Latin America Conference, the local subcommittee decided to make the conference a bi-annual event. The main reason for this was to organise a conference where relevant, new information can be discussed with the key participants of the community.

The decision was 100% correct: compared to previous, not only FIX Community events, but also other events for the financial market in the region, an impressive change in quality could be perceived. The focus was on content. The setup convinced BTG Pactual, who recently joined as a FIX Trading Community member, to host the conference in their new building, including all the breaks and technical installations.

During the introductory session, the future of electronic trading in the region was discussed including opportunities and challenges for the region’s trading desks. Additionally, the recent projects of the FIX Trading Community, like FIX and High Performance as well as the status of the new developments at the local exchanges, were presented and discussed.

New Markets for FIX in Brazil
For those who have followed the development of FIX usage in LatAm, it became clear in the last few years that the equity markets have achieved a certain degree of maturity. Most of the big players speak FIX nowadays, even though it may still be in a basic way. FIXatdl or questions like binary encoding are still exceptions.

LatAm 2014Nevertheless, the community now looks forward to use FIX for other purposes than only equities. Solutions are demanded for stock lending, block trading and, especially, fixed income.

The session on Fixed Income in Brazil under the moderation of Thiago Pavesi, Head of Electronic Trading at Itaú Asset Management, had an intensive discussion between the two big players in this space – Ricardo Vit of Cetip and Dennis Floh of Bloomberg. Cetip, the main custody entity in Brazil for corporate bonds explained its new offering for electronic trading. Although their initial design for accessing their trading platform only previewed a web-service, the continuous pressure from the local trading community made them give a higher priority for a new FIX interface.

The advantage of trading on their CETIP|Trader platform is the perspective of STP for post-trading. Traditionally, middle and back-office systems in Brazil already have a connection with Cetip.

Bloomberg, on the other hand, explained that their trading platform can already be accessed via FIX staging. When it comes to the interaction with regulatory systems, it would be helpful for the whole trading community if there is further collaboration.

It was a special feature of this session that, with the technological help from BTG Pactual, the panel integrated a video conference from New York. This idea was highly appreciated by the participants and probably will be used even more in the following years.

To fragment or not to fragment?
As Brazil has a unique equity exchange, the local community always wonders if the introduction of competition would have a positive impact for the market. Of course, the expectation is that lower trading costs will be the result. But, what about the inconvenience of having fragmented liquidity? The Argentinian market, with much less volume, now has six exchanges in existence. Although the examples of MILA (Mercado Integrado Latinoamericano) and recent efforts from the EU showed that cooperation among rivals is not easy, Argentina has created a success case. During the session they explained some of the key factors: 100% use of FIX, focus on technical questions, and not bargaining over business questions. As Soledad Castro from Argentina’s SEC mentioned, the regulator’s vision was to keep the IT people doing their job and not to interfere. This session, moderated by Diego Anfossi from Mercado Abierto Electrónico (MEA), was very entertaining, especially because of the humorous anecdotes coming from the different exchange representatives and their interaction with Argentina’s SEC.

After the lunch break, there were three sessions that were more technical. These focused on a number of different topics and the initial presentation gave an overview of the IT trading infrastructure in the region. The final two sessions of the day looked at the consequences of fragmentation and what are the challenges for the participants, TCA, algos and market data as well as market participants’ views on ‘Best Execution’.

Thank you to our host, BTG Pactual, and to all the sponsors and panelists on the day. It was a successful event and we look forward to seeing you back in the region in 2016.

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